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Mergers and Acquisitions (M&A) activities in India has been buoyant from 2015 to 2019, with a steady pipeline of more than 3,600 deals with an aggregate value of more than $310 billion, according to a study.
Large deals doubled in value between 2015 and 2016 to $23 billion and again doubled to $56 billion between 2017 and 2018. M&A activity recorded a 70 per cent growth in 2018, led by distressed deals enabled by the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC), it according to a Confederation of Indian Industry (CII) and Bain & Co report.
The report - ‘India M&A Report 2019’ - focused on 60 largest transactions by strategic investors in India between 2015 and 2019, each valued at more than $250 million (referred as large deals).
Large deals
The total deal value of these large deals during this period stood at $120 billion. The deal size also grew during this period, averaging $0.7 billion in 2015 to more than $2.6 billion in 2017 and 2018. In addition, deal volume has been robust across sectors, with industrial goods, energy, and telecom and media representing more than 60 per cent of deals by volume and value.
The largest deals took place in the energy and technology sectors, it added. Despite recent concerns about the slowing economy, the India story during this time-frame has been a significant driver of M&A.
Distressed assets
First, the IBC’s continuing efforts have been crucial as a mechanism for price discovery and recovery of distressed assets which accounted for about 70 per cent of the growth in deal value in 2018 (over 2017). the consolidation in the industry, enabled industry leaders to pull away from their competition.
Airtel’s acquisition of Tata Teleservices (2019) and Telenor assets (2018) and UltraTech Cement’s acquisitions of Jaypee Cement (2017) and Binani Cement (2018) are examples of large players consolidating their positions.
Further, non-distressed deals grew to 20 per cent in 2018 from 9 per cent of large deal volume in 2015. The examples of these include Walmart’s big bet on India with Flipkart and IHH Healthcare Bhd’s bid for Fortis Healthcare.
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